The first step in buying a home is understanding your finances. This means evaluating your income, debts, savings, and credit score to determine how much home you can afford. Lenders typically recommend that your monthly housing costs (including mortgage, taxes, and insurance) not exceed 28-31% of your gross monthly income. You’ll also need to consider how much you can put toward a down payment—typically 3% to 20% of the home’s price—and ensure you have enough saved to cover closing costs, which usually range from 2% to 5% of the home price. Having a clear budget will help you narrow down your home search to properties within your financial range.

Before you start searching for a home, it’s important to find a reputable mortgage lender and get pre-approved for a loan. A pre-approval letter shows sellers that you're serious and financially capable of buying. Start by researching and comparing mortgage lenders, as different lenders may offer varying interest rates, fees, and loan terms. Once you’ve chosen a lender, you’ll need to provide documentation, such as proof of income, credit history, and debt-to-income ratio, to get pre-approved. This will give you a clear idea of how much you can borrow and will help streamline the offer process once you find the right home.

With your pre-approval in hand, the next step is finding a knowledgeable real estate agent to guide you through the process. A good agent will not only help you find homes that meet your needs but will also act as your advocate, negotiating on your behalf and navigating the complexities of the real estate transaction. Start by researching agents with local expertise in your target areas, strong communication skills, and experience working with buyers like you.

As of August 17, 2024, following the NAR settlement, buyers are now required to sign an Exclusive Buyer Broker Agreement before working with an agent. This agreement clarifies the agent’s role, the services they’ll provide, and how they’ll be compensated. It ensures that you and your agent are aligned from the start and that they are fully committed to representing your interests throughout the buying process. Your agent will explain the details of the agreement and ensure you’re comfortable with the terms before moving forward.

Once you’ve established your budget, secured financing, and hired an agent, you can start searching for homes. Your agent will help you find listings that match your preferences—whether you’re looking for a specific style of home, certain amenities, or a particular neighborhood. Attend open houses or schedule private showings with your agent to tour homes. During this phase, be flexible and open to seeing a variety of homes, as this will help you refine your preferences. Keep in mind that Chicago’s housing market can be competitive, so be prepared to move quickly when you find the right home!

When you find a home that feels like a perfect fit, your real estate agent will help you write up and submit an offer. The offer includes the purchase price you’re willing to pay, your pre-approval information, contingencies (like home inspection, appraisal, or financing), and a proposed closing date. Your agent will also advise you on the current market conditions, helping you decide whether to offer more or less than the asking price based on comparable sales and demand. The seller may accept your offer, reject it, or submit a counteroffer, and your agent will negotiate on your behalf to reach the best possible deal.

Once your offer is accepted, the next critical step is scheduling a home inspection. A licensed inspector will thoroughly evaluate the property to check for any structural, mechanical, or safety issues. They’ll examine the roof, foundation, plumbing, electrical systems, and more to ensure there are no hidden problems. If significant issues are uncovered, you can negotiate with the seller for repairs, request a price reduction, or even walk away from the deal if the inspection contingency is in place. The inspection gives you peace of mind that the home is in good condition before you move forward.

With the inspection completed, it’s time to finalize your mortgage. At this stage, your lender will need to appraise the home to ensure its value matches the sale price. They’ll also lock in your interest rate and finalize the loan terms, which may require you to submit additional documents such as updated bank statements or employment verification. This process can take a few weeks, so it’s essential to stay in close communication with your lender and provide any requested information promptly. Once your loan is approved, you’ll receive a Closing Disclosure outlining your loan details and total closing costs.

Before closing, you’ll need to secure homeowners insurance. Lenders require this to protect the property in case of damage or loss. Homeowners insurance covers the home’s structure, personal belongings, and liability in case of accidents. It’s wise to shop around for insurance providers to find the best coverage at a reasonable rate. Your real estate agent or lender can recommend companies, but you should compare policies to ensure you’re adequately protected. You’ll need proof of insurance before you can close on the home.

Before you head to the closing table, you and your agent will conduct a final walk-through of the home. This usually happens within 24 hours of closing. The purpose of the walk-through is to ensure that the property is in the same condition as when you made your offer and that any agreed-upon repairs have been completed. You'll want to check that appliances, systems (like HVAC), and fixtures are in working order and that there’s no new damage to the home. If any issues arise, your agent will work with the seller’s agent to address them before closing.

Closing is the final step in the home-buying process. On closing day, you’ll meet with the seller, your agent, your attorney (if applicable), and a closing agent to sign all the necessary paperwork, including the deed and loan documents. You’ll also pay the remaining closing costs, such as title insurance, property taxes, and attorney fees. Once everything is signed, the property title will be transferred to you, and you’ll officially become the owner. Your lender will then fund the loan, and you’ll receive the keys to your new home!

After closing, it’s time to move in and make the house your own! Whether you’re coordinating movers, tackling DIY projects, or simply unpacking and settling in, this is the exciting part of the journey. Enjoy the process of turning your new house into a home and exploring your new neighborhood. And remember, your agent is still a great resource even after the sale, ready to help with any questions or future real estate needs.